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2017 DIGILAW 1949 (MAD)

Narayana Sathiya Siva Senathipathi v. Natarajan

2017-07-11

R.SUBRAMANIAN

body2017
JUDGMENT : The defendant in OS.No.4 of 2006, which is a suit for recovery of money, is the appellant. The said suit was filed by the respondent/plaintiff based on the promissory note dated 15.12.2002 under which, according to the appellant/defendant had borrowed a sum of Rs.4,00,000/- agreeing to repay the amount with interest at 12% per annum. According to the plaintiff he issued a notice demanding the repayment on 08.09.2005 to which the defendant sent a reply seeking a copy of the promissory note on 13.09.2005. Immediately on 15.09.2005 a copy of promissory note was sent to the counsel for the defendant and on receipt of the same, nearly after a month i.e. 20.10.2005, the defendant sent a reply claiming that the promissory note has been created by the plaintiff utilizing his signature obtained in blank forms when he was employed with the plaintiff. According to the plaintiff, the claim in the reply notice is false. Therefore, he is entitled to the decree for repayment for a sum of Rs.4,00,000/- along with 12% interest per annum. 2. The defendant resisted the suit contending that there was no borrowing. According to the defendant, the plaintiff was the proprietor of one Madurakaliamman Textiles and the plaintiff's sister was running a textile business in the name of Spear Tex. The defendant joined as an employee in Spear Tex in the year 1999. Since the defendant's job involved dealing with cash as well as going to banks and looking after the banking transactions of both the businesses the plaintiff had obtained his signature as well as the left thumb impression in blank papers and blank promissory notes as a security. 3. During the course of the employment, they became family friends and the defendant and his father had deposited the title deeds and stood as guarantors for repayment of the loans obtained by the plaintiff in the course of the business. The defendant and his father had also handed over the original documents relating to the properties as security for borrowing made by the plaintiff from the Bank of Madura and thereafter the Corporation Bank. 4. Since the plaintiff defaulted in repayment of loans the property belonging to the defendant and his father were advertised to be sold by the Bank under the provisions of the SARFAESI Act. 4. Since the plaintiff defaulted in repayment of loans the property belonging to the defendant and his father were advertised to be sold by the Bank under the provisions of the SARFAESI Act. When the defendant and his father demanded the plaintiff to repay the bank loan by selling his properties, the relationship became strained and hence, the plaintiff utilising the blank signatures obtained from the defendant had created the promissory note and filed the present Suit. 5. On the above pleadings, the learned Trial Judge, framed the following issues for determination in the suit: (1) Whether the plaintiff is entitled to the suit amount as claimed in the plaint? (2) Whether the suit promissory note is true? (3) Whether the suit promissory note is created a document and is legally invalid? (4) Whether the suit promissory note is not supported by consideration? (5) To what relief that the plaintiff is entitled? 6. The plaintiff examined himself as P.W.1 and examined one Shanmugasundaram, who is the attestor to the suit promissory note, as P.W.2. Exhibits A1 to A6 were marked. The defendant examined himself as D.W.1 and Exhibits B1 to B4 were marked. 7. Upon consideration of the facts and circumstances of the case, the trial Court concluded that the defendant has not establish his defence that the promissory note was prepared using the blank signed papers left by him with the plaintiff, during the course of his employment in the year 1999. upon such conclusion the learned Trial Judge relying upon the presumption under Section 118 of the Negotiable Instrument Act, concluded that the defendant has not let in enough evidence to rebut the statutory presumption under Section 118 of the Negatiable Instrument Act. On such finding the Trial Court, decreed the suit. 8. Aggrieved the defendant is on appeal. 9. I have heard Mr. S.S. Swaminathan, the learned counsel appearing for the appellant and Mr. V.S. Kesavan, learned counsel appearing for the respondent. 10. Mr. S.S. Swaminathan, learned counsel for the appellant would take me through the evidence of P.W.1 and contend that P.W.1 has given different versions both with respect to the payment made to defendant and the Income Tax return filed by him. V.S. Kesavan, learned counsel appearing for the respondent. 10. Mr. S.S. Swaminathan, learned counsel for the appellant would take me through the evidence of P.W.1 and contend that P.W.1 has given different versions both with respect to the payment made to defendant and the Income Tax return filed by him. While admitting he is an Income Tax Assessee from 1995 to 2003, he has not chosen to produce his Income Tax Returns to show that he had lent money to the defendant on the date of the promissory note i.e. 15.12.2002. The learned counsel would invite my attention to the conflicting oral evidence in cross examination of P.W.1, and would rely upon the judgment of the Hon'ble Supreme Court in Kundan Lal Rallaram Vs. Custodian, Evacuee Property, Bombay, AIR 1961 SC 1316 , to contend that the trial Court was not right in holding that the defendant has not let in enough evidence to rebut the presumption. According to the learned counsel, the presumption under Section 118 of the Negotiable Instrument is not an absolute presumption and the same can be rebutted by admission of the opposite party also. According to him the conflicting versions given by the plaintiff in cross examination would show that the claim of lending stood improbabilised. 11. Per contra, Mr. V.S. Kesavan, learned counsel appearing for the respondent would contend that once execution of promissory note is admitted or proved it is for the defendant to let in tangible evidence to show that the promissory note is not supported by consideration. He cannot succeed by picking holes in the plaintiff case. The learned counsel would also rely upon the Judgment of this court in Murugesan Vs. Subramaniya Goundar and others, reported in [ 1997 (III) CTC 478 ]; M. Kokila Vs. A. Dhanalakshmi, reported [2014 (4) CTC 805] and Natarajan Vs. Marappa Gounder, reported in [ 2004 (4) CTC 729 ]. Relying upon the observations of the Division Bench in Natarajan Vs. Marappa Gounder, Mr. V.S. Kesavan, learned counsel would contend that the defendant has not discharged the burden of proving that the promissory note is not supported by consideration. 12. On the above arguments, following points arise for determination in the appeal : 1. Whether the trial court was right in holding that the defendant has not established absence of consideration for the suit Promissory Note? 2. 12. On the above arguments, following points arise for determination in the appeal : 1. Whether the trial court was right in holding that the defendant has not established absence of consideration for the suit Promissory Note? 2. Whether the admissions/contradictions in the evidence of the plaintiff would be taken into account by the court, to conclude that the presumption under section 118 of the Negotiable Instrument Act stood rebutted? 13. Since both the points, involved the consideration of the oral evidence of the parties, they are dealt with together. The consistent case of the defendant is that the plaintiff had no money at all to lend in the year 2002. It is also an admitted fact that the defendant and his father stood as guarantors apart from giving their property as security for the borrowal made by the plaintiff for the purpose of his business. It is also admitted fact that business of the plaintiff became sick and the properties were brought for auction by the Financiers/Bankers invoking the provisions of the SARFAESI Act and the plaintiff has repaid the amount by selling one of his properties. 14. Now we have to look into the evidence on record. The plaintiff has no consistent case, regarding the passing of consideration for the Promissory Note. The plaintiff as PW.1, during cross examination, would state as follows. xxx 15. It is also admitted by P.W.1, in his cross examination that his cheques had bounced and cases under section 138 of Negotiable Instrument Act, were filed against him. P.W.2, attesting witness would depose that he has signed as witness in the promissory note. In his chief examination, P.W.2 would identify his signature and state that he does not know whether consideration passed. However, in his cross examination, he would admit that he is known to the plaintiff for nearly eight years. A reading of the entire evidence of P.W.2 would show that he is only a chance witness. He claims to have travelled from Tirupur to the native place of the plaintiff, which is about 50 Kms. Though, in his evidence, he would admit that he is residing at Tiruppur, in the Chief examination, he has stated that he is residing at Sengodampalayam. This itself shows that he is not a reliable witness. 16. He claims to have travelled from Tirupur to the native place of the plaintiff, which is about 50 Kms. Though, in his evidence, he would admit that he is residing at Tiruppur, in the Chief examination, he has stated that he is residing at Sengodampalayam. This itself shows that he is not a reliable witness. 16. Of course, under section 118 of the Negotiable Instrument Act, a statutory presumption, is created with reference to passing of consideration once the execution of the Negotiable Instrument admitted. In the case on hand, the specific plea of the defendant is that the promissory note was obtained by the plaintiff, when he joined as a employee in the business run by the sister of the plaintiff in the year 1999 towards security. At best it can be concluded that the signature is admitted, but not the execution of the promissory note as such. There is a difference between the admission of signature and admission of execution of the document. However, Section 20 of the Negotiable Instrument Act, empowers the holder of the Promissory Note to fill up such inchoate instrument and sue upon it. Presumption under Section 118 of Negotiable Instrument Act, would arise in such case also. 17. Now, it is to be seen whether the presumption has been rebutted by the defendant. On the question of rebuttal the Hon'ble Supreme Court in Kundan Lal Rallaram Vs. Custodian, Evacuee Property, Bombay reported in AIR 1961 SC 1316 , referring to the provisions under Section 118 of the Negotiable Instrument Act and Section 101 of the Evidence Act, held as follows:- “4. To appreciate this argument it would be necessary to notice at the outset the scope of the presumption under Section 118 of the Negotiable Instruments Act and also the different methods available to a person against whom such a presumption is drawn to rebut the same. The relevant part of S.118 of the Negotiable Instruments Act reads: “Until the contrary is proved, the following presumption shall be made:- (a) that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.” 5. ..... Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. ..... Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved the rule of presumption laid down in Section 118 of the Negotiable Instruments Act helps him to shift the burden to the other side. The burden of proof as a question of law rests, therefore, on the plaintiff; but as soon as the execution is proved, Section 118 of the Negotiable Instruments Act imposes a duty on the court to raise a presumption in his favour that the said instrument was made for consideration. This presumption shifts the burden of proof in the second sense, that is, the burden of establishing a case shifts to the defendant. The defendant may adduce direct evidence to prove that the promissory note was not supported by consideration, and if he adduced acceptable evidence, the burden again shifts to the plaintiff, and so on. The defendant may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift again to the plaintiff. He may also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. Under Section 114 of the Evidence Act.” 18. From the above, declared position of law, it is clear that the defendant case rely upon, even the circumstantial evidence to rebutt the presumption. I had followed the said Judgment of the Hon'ble Supreme Court in G. Vasantha Versus Maharaja Kallash Benefit Fund Ltd, reported in [ 2017 (2) CTC 625 ]. If we are to analyse the evidence available on record, in the light of the legal position summarised by the Hon'ble Supreme Court, it is seen that the evidence of the plaintiff himself is sufficient to hold that the presumption under Section 118 stood rebutted. From the evidence, extracted above it is seen that the plaintiff claims that he had the money. He claims the source of funds through the sale of the properties in November 1999. The sale deed or deeds have not been produced. The promissory Note is dated 15.12.2002. Therefore, it is almost three years after the sale and it is highly improbable that the plaintiff who is a business man retained the money for three years for advancing the same to the defendant. The sale deed or deeds have not been produced. The promissory Note is dated 15.12.2002. Therefore, it is almost three years after the sale and it is highly improbable that the plaintiff who is a business man retained the money for three years for advancing the same to the defendant. The very fact that the plaintiff has not shown this sum of Rs.10,00,000/- in his income tax return would militate against his claim. 19. Again the plaintiff deposed that he had taken the money from his brother-in-law, three days prior to the lending. This evidence, belies the claim of the plaintiff that he had the money namely the proceeds of the sale deed executed by the plaintiff in the year 1999 and the same was advanced to the defendant in the December 2002. Again, the plaintiff has deposed that he kept the money only in the ancestral house and hence the pro note was executed in his ancestral house instead of Tiruppur. This conflicting evidence on the part of the plaintiff would itself, in my considered opinion is enough to rebutt the statutory presumption created under section 118 of the Negotiable Instrument Act. This court in Murugesan Vs. Subramaniya Goundar and others [ 1997 (3) CTC 478 ] observed that the defendant cannot take advantage of the weakness of the case of the plaintiff. At the same time, when the plaintiff's evidence is totally unbelievable and it is improbablised the plaintiff's case, I do not think, the plaintiff could be entitled to a decree, despite such improbable evidence. 20. Mr. V.S. Kesavan, learned counsel would rely upon the judgment of the Division Bench in Natarajan Vs. Marappa Gounder, reported in 2004 (4) CTC 729 , wherein this court has held that non production of accounts books cannot be a ground to dismiss the suit in the case of individuals. But, the same Division Bench in Paragraph 20 of the said Judgment as observed as follows :- 20. It is true that in spite of the obligatory presumption under the said Section 118 of the Negotiable Instruments Act, the party concerned is required to adduce independent proof of passing of consideration. But, the same Division Bench in Paragraph 20 of the said Judgment as observed as follows :- 20. It is true that in spite of the obligatory presumption under the said Section 118 of the Negotiable Instruments Act, the party concerned is required to adduce independent proof of passing of consideration. Where the thumb impression upon a blank paper are taken by the plaintiff, the burden lies upon the plaintiff to prove the execution of the promissory note by the defendant and thereafter, the onus shifts upon the defendant to prove that there is no consideration for such document. 21. The plaintiff who had deposed that he has been an income tax assessee from 1995 to 2003 has also deposed that he has not disclosed the sale of his properties in his income tax returns. This, in my view, creates considerable suspicion on the case of the plaintiff. 22. Mr. V.S. Kesavan, learned counsel would also draw my attention to the judgement of this court in M. Kokila Vs. A. Dhanalakshmi, reported in 2014 (4) CTC 805, wherein this court has held that drawal of a adverse inference for non production of bank accounts and Income Tax returns is not proper. 23. The Judgement of the Hon'ble Supreme Court in Kundan Lal Rallaram Vs. Custodian, Evacuee Property, Bombay case referred to Supra, has not been brought to the notice of the learned Judge. When there is as enough circumstantial evidence to dislodge the claim of the plaintiff regarding the very advance itself. I do not think, this court is precluded from considering the said evidence to conclude as to whether the promissory note is supported by consideration or not. Therefore, the Judgment is not helpful to the plaintiff in this matter. 24. Therefore, I conclude that the presumption under Section 118 stood rebutted by the very admissions of the plaintiff in his cross-examination. The cumulative effect of the admissions made in cross examination extracted above improbablised the theory of lending and has the effect of rebutting the presumption raised under Section 118 of Negotiable Instrument Act. The trial court had concluded that since the defendant has not established his theory that the promissory notes were given as security while he was employed with the plaintiff's sister's business, automatically the plaintiff would entitle to decree. Such a conclusion cannot be accepted. 25. The trial court had concluded that since the defendant has not established his theory that the promissory notes were given as security while he was employed with the plaintiff's sister's business, automatically the plaintiff would entitle to decree. Such a conclusion cannot be accepted. 25. In the light of the above discussion, I hold that the presumption regarding passing of consideration stood rebutted, the plaintiff has not established his case of passing of consideration for the promissory note and therefore, he is not entitled to the decree. Hence the appeal is allowed and the Judgment and Decree of the Trial Court are set aside. The suit in O.S.No.4 of 2006 shall stand dismissed with costs through out. 26. It is stated that as per the interim order of this court, the defendant/appellant had deposited 50% of the decree amount with subsequent interest. Since, the appeal is allowed, the appellant/defendant is permitted to withdraw the same from the Court.